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Topps gets a makeover

Tile merchant Topps Tiles has grown market share, increased the dividend by 50 per cent and seen profits soar by a third
November 25, 2014

"What gets me excited about the year ahead is some of the work we are doing to attract customers who haven't shopped with us before," explained Matt Williams, chief executive of Topps Tiles (TPT) as the tile retailer released full-year results.

IC TIP: Buy at 108p

Customer feedback from Topps' trial 'boutique' shops has been so exceptional that the pilot will be extended this year. Furthermore, the entire Topps estate is going to get a makeover akin to the boutiques: the iconic bright yellow and blue branding will be toned down to a slightly more sophisticated blue-grey.

Already, however, Topps' effort to improve the shopping experience and bolster the product range is paying off: like-for-like sales in the year jumped 8 per cent as the retailer increased its market share to 30.3 per cent from 28.5 per cent. The gross margin ticked-up, too, helping to boost adjusted pre-tax profit by a third to £17.1m. Net debt fell considerably as well - to a level management is now "comfortable" with. Mr Williams hinted at the potential for higher shareholder returns.

Broker Peel Hunt expects adjusted pre-tax profit to £18.8m for 2015, giving EPS of 7.5p (from £17.1m and 6.6p in 2014).

TOPPS TILES (TPT)
ORD PRICE:108pMARKET VALUE:£209m
TOUCH:108-109p12-MONTH HIGH:156pLOW:86p 
DIVIDEND YIELD:2.1%PE RATIO:17
NET ASSET VALUE:0.4p*NET DEBT:£30.5m

Year to 27 SepTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201018212.44.61.00
20111767.93.01.00
201217812.55.11.25
201317810.64.81.50
201419516.76.52.25
% change+10+57+36+50

Ex-div: 29 Dec

Payment: 30 Jan

*Includes intangible assets of £245,000 or 0.13p a share